Below we present two more charts for your rubbernecking pleasure. First, we observe the just released data showing Spanish bank borrowings from the ECB: at €287.8 billion, this was a €24 billion increase from April, €235 billion from a year earlier, and the highest ever. More importantly, as can be seen on the first chart below, for the first time since June of 2011, Spanish bank ECB borrowings increased to more than those of Italy, which at just €272.7 billion rose a mere €2 billion from April month (to a new record as well). In other words, both Italy and Spanish banks are now spurned by counterparties everywhere, but Spain's a little bit more than Italy's. Yet before Italy gloats, it bears reminding Italy that its own offsetting factor, and where it is weakest, its insane public debt, just hit a new record high of €1.95 trillion, pushing the country's debt to GDP ratio well into the 120%+ range.

Ok, so why doesn't the ECB just tell Italy to go swing, lend all its money to Spanish banks which can then make new loans to Italy with their super new capital ratios, which will then in turn be well capitalised to lend even more money back to Spain, and out of the profits, recapitalise Greece?

Instead of paying massive taxes on the exorbitant profits, the banks could put the 'taxes' into their own reserves and using fractional reserve banking rules, lend 10 times the 'taxes' back to the govt, which the govt would never need to repay because the 'loans' could be sold back to the ECB as now AAA sovereign debt, piece of piss this banking mularky.

It's not going to work. Think about two thieves: they are cool to steal together from others, but deep down inside they don't trust each other to lend money. This is the reason they are asking for EURO-bonds.

Quote: Yet before Italy gloats, it bears reminding Italy that its own offsetting factor, and where it is weakest, its insane public debt, just hit a new record high of €1.95 trillion, pushing the country's debt to GDP ratio well into the 120%+ range.